Croatia has adopted the euro, becoming the 20th member of the single currency area at a time when the bloc faces record inflation and a looming recession.
The membership, which began yesterday after a three-year adjustment process, means that Croatia will be subject to monetary policy decisions by the European Central Bank and be part of the eurozone’s banking supervision framework.
“Croatia worked hard . . . and it succeeded,” Christine Lagarde, the bank’s president, said. “I congratulate the Croatian people. It shows the euro is an attractive currency which brings stability to its members.”
It marks the eurozone’s first expansion since Lithuania became the 19th member in 2015. The bloc has recently undergone a series of sovereign debt crises, putting a hold on some prospective new members. It does not consist of all 27 EU member states because the likes of Sweden and Denmark opted out at the single currency’s inception in 1999 and poorer economies such as Poland, Hungary and Romania have been excluded. Bulgaria is due to join next year.
Alongside the switch from the kuna currency, Croatia joins the EU’s passport-free Schengen zone.
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The eurozone is facing average inflation of 10.1 per cent, having hit a record 11 per cent this year. In Croatia itself the figure is 13.4 per cent, the highest since records began in 2004. Its economy is expected to grow by 1 per cent this year, slightly better than the eurozone average.
